Coca Cola and Pepsi
Coca Cola is the largest manufacturer and distributor of non-alcoholic beverages worldwide. In as much as the company has enjoyed domination and success throughout the years, it has faced fierce competition from other international brands, especially Pepsi, its main rival. The rivalry between Pepsi and Coca Cola has kept both companies on their toes and promoted innovation and the development of corporate strategies for market domination. Coca Cola has however maintained a leadership position with the Cold War with Pepsi Co. As of 2011, Coca Cola’ s market share was 51% while PepsiCo had 22% while Dr. Pepper Snapple is 15% while the rest take the remaining 12%.
Competition among the already existing brands creates a barrier for entry for new players within the market apart from the high cost of start up a company. The soft drink industry also requires huge capital to establish a business that can compete favorably with the existing organization. Coca Cola, Pepsi, Dr. Pepper Snapple are leaders in the industry due to their investment in innovation, and stiff competition they have among each other.
The soft drink industry exists in an Oligopoly with Coca Cola and Pepsi as the key players controlling the market; others such as Dr. Pepper and local brands are relatively insignificant for consumers. New entrants find numerous barriers to entry within such markets. Coca Cola and Pepsi use product differentiation as a strategy to attract consumers in the battle of domination of the industry.
Section VI: Recommendation
Although Coca Cola enjoys domination within the business environment, Pepsi Co is slowly catching up. Therefore the company needs to put in place appropriate corporate strategies to beat the competition. For instance, Coca Cola should work on reducing the expenditure incurred in meeting its variable costs to ensure that the company maximizes on output and profitability. Coca Cola also needs to encourage creativity and innovation to beat the stiff competition from Pepsi Co that has already become a leader in innovation. Currently, Pepsi has heavily invested in integrated, multimedia marketing strategies. Coca Cola needs to intensify its marketing, especially in foreign markets, that company is yet to tap. Pricing strategy would not make a significant difference because the prices of soft drink are standardized, therefore lowering the cost may be an advantage in the short run but have detrimental effects on the long term. Therefore, to maintain its top position in the market, Coca Cola should invest in appropriate corporate level strategies. It should improve its marketing strategies and encourage innovation for the development of differentiated products.